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Sattva Capital Announces Supreme Court Victory

Canada's top court determines reasonableness as the standard of review and tightens standards on granting leave to appeal of commercial arbitration awards.

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/01/14 -- Sattva Capital is pleased to announce the Supreme Court of Canada in a 7-0 decision has upheld the arbitrator's breach-of-contract damage award against Creston Moly, a subsidiary of Mercator Minerals.

Written by Mr. Justice Marshall Rothstein, the ruling from Canada's top court overturns two judgements from Court of Appeal for BC (BCCA), British Columbia's highest court. The first granted Creston leave to appeal on the basis of a non-existent error of law. The second compounded the previous error by ruling itself and the court below (the Supreme Court of BC) ought to be bound by the comments of the judges from the previous leave ruling.

Both judgements were fundamentally flawed. If left unchallenged, they would have set troubling precedents, unleashing a flood of frivolous appeals from arbitral awards, creating a burden on the justice system and at the same time undermining the independence of lower court judges hearing appeals.

The Supreme Court of BC, by contrast, heard Creston's appeal twice and dismissed it as without merit.

"As we have said before, the pie is not finite. Transactions are not zero-sum games," said Hai Van Le, Sattva Capital's Managing Director. "The fee we earned is a direct result of our tremendous efforts and knowledge over the years and the ingenuity in coming up with solutions to seemingly irreconcilable differences. We were the catalyst that made the deal happened in the first place, in the process making the pie bigger for everyone involved. There's enough abundance for everyone. Parties to a transaction have a moral duty to fulfill their obligations to one another in an ethical and honourable manner."

A CLEAR LEGAL FRAMEWORK TO GUIDE JUDGES

With this ruling, Canada's top judges have defined narrow, explicit parameters that those who wish to appeal arbitral awards must meet before they are given leave to appeal. In practical terms, this judgement will reduce the incidence of frivolous appeals, bringing the system more in line with the norms in other Western countries.

"This ruling is a game-changer and will have a positive ripple effect on both Canadian society and the economy," said Mr. Le. "The savings to the taxpayer-funded justice system across the country will be substantial. Our perseverance in the last seven years in the face of unexpected, seemingly insurmountable obstacles imposed by the BCCA has not been in vain."

At the same time, the Court also clarifies the standard of review for judges when reviewing arbitral awards.

The ruling marks a victory for both the Attorney General of BC and the British Columbia International Commercial Arbitration Centre (BCICAC) Foundation which intervened at the Supreme Court hearing. Both parties get the clarity they sought on a number of important issues, namely, reasonableness as the standard of review, and whether contractual interpretation gives rise to questions of mixed fact and law or pure questions of law.

The ruling is also a vindication for the arbitrator - Mr. Leon Getz - an experienced securities lawyer with a history of distinguished service. The Supreme Court finds no flaws with his well thought-out and reasoned award.

And finally, this judgment is a triumph of substance over clever arguments. Wedge issues exploiting a technicality or an ambiguity can only get one so far in the judicial system before they are exposed for what they are - shallow, divisive and ultimately lacking in substance.

ARBITRATION - SPEEDY, EFFICIENT AND FINAL - AS INTENDED BY THE LAW

It's not a surprise that the Canadian public consistently view courts as being too slow, cumbersome - and costly. A justice system permitting the unhappy losing party to mount appeal after appeal based on flimsy narrow grounds is in serious need of reform.

Going forward, Canadian businesses now have two distinct choices to resolve disputes. They can continue to rely on the taxpayer-funded court system with its attendant loss of privacy, lengthy proceedings and multiple appeal steps or they can settle differences through arbitration knowing the outcome is final and binding as intended by the law. Parties who wish to launch a challenge to an unfavourable arbitration decision may still do so, but they will discover that the odds of success are not in their favour. In all likelihood, they won't even get past the initial leave application stage.

"We salute the judges of Canada's top court for their leadership, their foresight, and their progressive approach to making the justice system more accessible and affordable for more Canadians," said Mr. Le.

A chronology of events can be found at www.sattvacapital.net/play-by-the-rules.html.

About Sattva Capital: Sattva Capital is an international financial advisory firm focused on cross-border M&A, strategic partnerships and corporate finance in the mining industry. We leverage global connections, game-changing ideas, and deep industry knowledge to help clients achieve transformational growth.

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